Global stock markets jumped and the dollar strengthened after a major US court ruling blocked President Trump’s sweeping new tariffs, throwing his trade strategy into legal turmoil and easing investor concerns over further economic disruption.
The FTSE 100 rose 0.5 per cent in early trading before paring gains to close flat, while Germany’s DAX gained 0.8 per cent and France’s CAC 40 added 1 per cent. In Asia, Japan’s Nikkei surged 1.88 per cent and China’s SSE Composite rose 0.7 per cent. US stock futures also pointed to a stronger open on Wall Street.
The rally came after the Court of International Trade in Manhattan ruled that Trump had exceeded his executive authority by unilaterally imposing tariffs on countries with large trade surpluses with the US. The decision temporarily halts what Trump had branded as “Liberation Day” tariffs — sweeping import duties aimed at redrawing America’s trade relationships.
The White House immediately vowed to appeal the decision, which could ultimately be escalated to the Supreme Court. However, for now, the ruling casts serious doubt over Trump’s ability to deliver on his hardline trade pledges and undercuts the administration’s plans to rush through bilateral deals during a self-imposed 90-day pause in new tariffs.
“This throws the entire strategy into disarray,” said Paul Ashworth, chief North America economist at Capital Economics. “Other countries will now be emboldened to stall negotiations and wait to see if a higher court upholds the ruling.”
Alec Phillips of Goldman Sachs described the ruling as a “temporary setback” but warned that Trump could look for other avenues to impose economic penalties, including alternative forms of taxation.
Despite the uncertainty, markets took the ruling as a sign that the most extreme tariff measures may not materialise. US government bond yields rose, with 10-year Treasury yields up 4 basis points to 4.52 per cent, as traders dialled back expectations for near-term interest rate cuts. Gold slipped slightly by 0.12 per cent to $3,283 an ounce as investors stepped away from safe-haven assets.
Currency markets also reacted, with the dollar climbing on expectations that a rollback in tariffs could ease inflationary pressures. Yunosuke Ikeda, head of macro research at Nomura in Tokyo, said: “Trump’s tariffs have been adding to stagflationary risks. If those are reversed, it would be a clear positive for the dollar and help restore investor confidence in the US outlook.”
Minutes from the Federal Reserve’s latest meeting, released yesterday, highlighted growing concern among central bank officials that Trump’s tariff policies could entrench inflation. “Almost all participants commented on the risk that inflation could prove to be more persistent than expected,” the minutes noted, reinforcing market caution.
As a result, traders have pushed back expectations for a Fed rate cut, with the likelihood of a July move now down to 22 per cent, while the probability of a September cut has fallen to 60 per cent, compared to more than 100 per cent pricing just a month ago.
The ruling marks a rare legal blow to Trump’s increasingly aggressive trade stance, which has roiled markets and strained relations with allies and trading partners alike. With legal uncertainty now looming large over the White House’s next moves, markets are likely to remain volatile — but for now, investors are seizing on a rare glimmer of relief.
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Markets rally as US court blocks Trump tariffs, sparking hopes of trade policy reset